Thank you for standing by, and welcome to the Australian Unity Office Fund full year results call. All participants are in a listen-only mode. There'll be a presentation followed by a question and answer session. If you would like to ask a question, you'll need to press the star key followed by the number one on your telephone keypad. I'd now like to hand the conference over to Ms. Nikki Panagopoulos, Fund Manager. Please go ahead.
Thank you. Good morning, everyone. Thank you for joining us, and welcome to financial year 2023 full year results announcement for the Australian Unity Office Fund. My name is Nikki Panagopoulos, and I'm the fund manager for AOF. I'm joined by Simon Beake, the portfolio manager. Earlier today, we published various documents on the ASX, including the annual financial report for the full year ended 30 June 2023, Appendix 3, AOF Property Book, and the investor presentation, which we will go through this morning. Following the presentation, we will have time for Q&A. Let's turn to slide 2. Before we start, I would like to take this opportunity to acknowledge the traditional owners of the lands and waters within Australia and recognize the important connection to country that Aboriginal and Torres Strait Islander people have.
Today, I will provide you with an update of the financial year 2023 activity, update you with the financial results, and provide an update on outlook and guidance. Now let's turn to slide 3. During the year, AOF continued to successfully execute on its strategy to maximize returns for unitholders. AOF sold 3 assets during financial year 2023, delivering approximately AUD 220 million of proceeds at an average 3% premium to the independent valuation. The proceeds from the asset sales were used to repay all of AOF drawn debt and fund the June 2023 ordinary and special distribution of AUD 0.25 per unit. Total distributions for the year were AUD 53.4 million, or AUD 0.325 per unit, comprising ordinary distribution of AUD 0.10 per unit and a special distribution of AUD 0.225 per unit.
The refurbishments at 10 Valentine Avenue and 150 Charlotte Street are progressing, and the capital position of the fund is solid, with no drawn debt and an AUD 81 million debt facility available to fund the refurbishment works and advance potential leasing outcomes. Turning to slide four. In line with AOF investment objective to maximize returns for unitholders, we successfully sold and settled approximately AUD 220 million of assets at 10% premium to the 30 June 2022 independent valuation. A great result for unitholders. 30 Pirie Street, Adelaide, was sold for AUD 73 million, reflecting the independent valuation of the assets at 30 June 2022. 2 Eden Park Drive, Macquarie Park, was sold for AUD 68.825 million, reflecting a 10% premium to the 30 June 2022 independent valuation.
Five Eden Park Drive in Macquarie Park was sold for AUD 80.775 million, reflecting approximately 1% to the 30 June 2022 independent valuation. Executing on these 3 sales and returning capital to unitholders through the special distribution has demonstrated our commitment to maximize returns for unitholders. Turning to slide 5. AOF's 5 assets were revalued in the 6 months to 30 June 2023. The total portfolio value of approximately AUD 310 million equates to 6,354 AUD per sq m, with a weighted average capitalization rate of 6.45%. The portfolio comprises 2 value-add opportunities, valued at AUD 171 million, complemented by 3 high-quality multi-tenanted properties.
The multi-tenanted properties are 468 St Kilda Road, Melbourne, 96 York Street, Beenleigh, and 64 Northbourne Avenue, Canberra, valued at approximately AUD 139 million, have a weighted average lease expiry of 4.2 years and an occupancy of approximately 90%. Turning to Slide 6. The value add properties provide refurbishment and repositioning opportunities. At 10 Valentine Avenue, Parramatta, the tender process for on-floor and base building works has been completed. On-floor works have progressed, with the first full upgrade completed. Works to upgrade the remaining floors, lobby, end of trip, and services have also advanced. Completion of the works is programmed for December 2023. The marketing and leasing campaign, showcasing the refurbishment works, has also commenced. At 150 Charlotte Street, Brisbane, the asset is currently 98% occupied, with a 1.2-year weighted average lease expiry.
Concept plans for the asset's repositioning are finalized, with design, documentation and costing progressing. The works to reposition the asset includes base building lift, a new end- of- trip, and activated lobby upgrade… Let's turn to slide 7. Funds from operations was AUD 0.117 per unit, with ordinary distributions of AUD 0.10 per unit. Following the sale of the 3 assets, with a special distribution of AUD 0.225 per unit was also paid. Net tangible assets of AUD 1.91 per unit reflects the independent valuations and includes a AUD 0.25 per unit provision for the June quarter, ordinary and special distribution, which was paid in July 2023 from available cash. AOF has no drawn debt and an AUD 81 million debt facility to fund the refurbishment, other capital works, and progress potential leasing outcomes. The facility expires in March 2025.
Now, let's turn to slide eight. We remain focused on maximizing returns for investors, including delivering on leasing, occupancy, and refurbishment outcomes, and being opportunistic with our portfolio construction, asset sales, and active asset management. AOF provides distribution guidance of AUD 0.013 per unit for the September 2023 quarter, and will continue to provide guidance on a quarterly basis. In closing, I thank you for your time today and for your investment in AOF. We look forward to continuing to advance the priorities listed and providing an update to investors in due course, with a focus on maximizing unitholder returns. This concludes the formal part of our presentation, and I will now pass you back to the moderator for Q&A. Thank you.
Thank you. If you would like to ask a question, please press star one on your telephone and wait for your name to be announced. If you'd like to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Murray Connellan from Moelis Australia. Please go ahead.
Morning, Nikki. Morning, Simon. I was wondering whether you could just give us a bit of an update on, I guess, just your expected outcomes around leasing for 10 Valentine. How long do you expect it to take to start signing new tenants in the context of where we are with those refurb works?
Thanks very much, Murray. It's Nikki speaking here. Yes, no, they're very good questions. Thank you. As we presented today, we are currently working through the works. The program has the works completed by December 2023, and that is all on floor works, a new End of Trip lobby, and some infrastructure works. We are marketing and leasing. We expect, and it is, you know, it is fair to say it is a challenging leasing market, but we expect to have the asset fully complete and then prospective tenants being able to inspect without any sort of constraints. At the moment it is a construction site.
So following, you know, some positive inspections, we would hope that, you know, in the first quarter or by half year, we can get some positive leasing momentum. However, I must note that it is a bit of a challenging leasing market as we sit here today.
Sure. And, are you able to share what the total intended CapEx spend is on that site? And then also, I guess, what you're thinking around CapEx is for 150 Charlotte?
Yes, no, absolutely. Our tender, we went—we undertook a tender process, and three construction managers tendered. And, for the work that we sit here today, it's expected that the works will cost about AUD 20 million. And that's to do with full refurb of the floors, a new end of trip, a new lobby, and services upgrade to that building. So repositioning and the asset to maintain and achieve green, you know, new sustainability initiatives. For 150 Charlotte Street, we—our concept plans have just been finalized, and we are progressing design documentation and, you know, looking at costings through a QS.
Yeah, it's similar sort of work that we're doing at 10 Valentine. We'll undertake at 150 Charlotte, but we'll also activate the lobby with a new concierge. You know, it is anticipated, as we sit here today, early stages, Murray, that the works, you know, will probably cost in the vicinity of AUD 10 million.
Thank you. And then, just also wanted to get a sense of what we should be thinking about in terms of the FFO run rates, as implied by your billing guidance. Is there some sort of payout ratio policy that we can be backing out of that?
To Simon?
Hi, Murray. So yeah, I mean, we generally have a 80%-100% FFO payout ratio, so you can probably back it out from what the distribution guidance is, roughly what the FFO in the first quarter would be. Obviously, the FFO, which is why we haven't provided full year guidance for further quarters, will depend upon the leasing success at Valentine Avenue.
Thanks very much.
So Murray, just 'cause I don't think Nikki actually touched the second half of your last question around incentives. So incentives for Valentine is probably in the order of AUD 20-25 million. Obviously, the total quantum will depend upon the term, and whether or not they're looking to spec it out or, or fit out incentives, et cetera, but you're probably talking AUD 20-25 million for Valentine Avenue and, say, half of that at 150 Charlotte Street.
That's great, color. Thanks, Simon. Thanks, Nikki.
Cheers.
Thank you. Once again, if you would like to ask a question, please press star one on your telephone and wait for your name to be announced. As there are no further questions at this time, I'll now hand back to Ms. Panagopoulos for any closing remarks.
For your time today. That completes the presentation. We'll make this webcast and audio call available on AOF's website, australianunityofficefund.com.au, as soon as possible. Thank you again.
That does conclude our conference for today. Thank you for participating. You may now disconnect.